Southeast Asia pharma market set to outgrow global average
As of calendar year 2024 (CY24), global total market size for pharmaceuticals is estimated at USD1.5 tri. In comparison, SEA's total market size is estimated at USD27 bil.
The significant growth for SEA indicates that ASEAN is a prime growth engine for the global pharmaceutical industry. This makes it an attractive destination for investment and market expansion.
The Philippines and Malaysia show steady growth in a biosimilar export potential, reaching USD 111 mil and USD 70 mil respectively by 2027.
Malaysia's growth, though robust, is relatively smaller in absolute terms compared to Thailand, Vietnam, and Indonesia.
However, companies like Duopharma and Pharmaniaga are actively developing Halal-certified biosimilars.
Overall, biosimilars is an untapped potential due to increasing healthcare demands and cost pressure.
'We believe that investing in local manufacturing of biosimilars can open avenues for SEA countries to export,' said MBSB Research.
Countries that prioritise and invest in local biosimilar production are likely to become stronger exporters in this field.
This aligns with the broader trends of high pharmaceutical market growth in SEA driven by demographics, NCDs, and the increasing sophistication of healthcare systems, all of which necessitate tailored and creative market strategies.
Malaysia's pharmaceutical sector boasts a strong and strategically recognized local manufacturing base that significantly contributes to medicine security, especially for generics and essential medicines.
While Malaysia demonstrates capabilities in exporting to highly regulated markets like the USA, it remains heavily reliant on imports for patented drugs, biologics, vaccines, and key APIs.
The main challenge for Malaysia lies in bridging this gap by further boosting local R&D, attracting more sophisticated manufacturing capabilities, and strengthening its position in the global pharmaceutical value chain beyond just generics.
79% of total volume of generic medicines and 47% of items listed in National Essential Medicines List (NEML) are locally produced.
However, most drugs, notably patented medicaments, immunoglobulins, human vaccines and insulins, are still dependent on imports.
Malaysia consistently shows widening trade deficit underscores Malaysia's high reliance on imported pharmaceuticals.
While local production is strong in generics, the country still depends heavily on foreign sources for innovative, patented, and specialised medicines.
This reinforces the government's strategic focus on local manufacturing and technology transfer to enhance medicine security and reduce import dependency in the long run.
The overall trend in the regional and local pharmaceutical market suggests that both domestic and foreign investors will see growing opportunities in Malaysia.
The 51% FDI / 49% DDI ratio suggests a healthy balance between local commitment, and global capital and expertise.
FDI indicates that Malaysia is highly attractive to foreign pharmaceutical companies, bringing in capital, technology, and global best practices, while DDI signifies robust local entrepreneurship and investment from Malaysian companies, demonstrating confidence in the domestic market and capabilities.
We opine that the untapped drug manufacturing ecosystem will continue to follow the megatrend of new innovative drugs – including biologics, biosimilars and cell & gene therapy drugs – and open more opportunities for Malaysia to be a major healthcare hub in the region.
While direct pharmaceutical exports from Malaysia to the US might face immediate headwinds from tariffs, the broader impact on Malaysia's healthcare subsector could come from indirect effects on global pharmaceutical supply chains and procurement costs.
This would affect the affordability and availability of medicines within Malaysia for all citizens and healthcare providers.
The Malaysian government and industry players are already responding by prioritizing supply chain diversification and exploring domestic production enhancements to mitigate these risks.
Meanwhile, we believe a multi-pronged approach involving government action, industry adaptation, and consumer awareness will be crucial.
Overall, we maintain positive on the healthcare sector. The pharmaceutical market is fundamentally driven by robust demographic trends, which naturally increases the demand for healthcare services and medicines. —July 23, 2025
Main image: Daily Sabah
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